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Comment by sarciszewski | Hacker News Reader

> Even worse, they had paid taxes on the stock based on the higher value.

That's the most annoying part of the entire article, and why I ask for salary rather than equity. Keep your stock, I'd rather pay my bills.

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Joining public or late stage pre-IPO companies, equity provides the possibility of real wealth. There is a great Wealthfront article about this -- that if you live in the bay area and have a normal nuclear family, you need equity if you hope to pay for a house, college, etc.

I've seen this in my own life and in many colleagues, friends, and people I've hired. It's not a guaranteed paycheck, but in the bay area getting a healthy equity grant is part of the standard comp package. Without luck, it can be a nice bonus. With some luck it can really move the needle. And with ISO's especially you can choose when to pay taxes on the income.

I know that outside the bay area comp packages are structured differently -- and often less lucratively.

The problem here is that "the possibility of real wealth" is not "real wealth". Not being dead provides "the possibility of real wealth" to approximately the same degree as the equity offered to anyone past double digit employee count. Even before that it's only factor unity above the baseline of "not yet dead"

It's a subjective term. But IMO, a few hundred grand after-taxes is real wealth to somebody making $150k a year. It can bend the net-worth growth curve of your life -- a huge home downpayment, elimination of your student loans, etc. Be smart, take an educated risk, and IMO don't listen to people who say equity is worthless.

A few hundred grand net absolutely is real wealth. To anybody really. But how many people are seeing a few hundred grand after-taxes (after taxes!)?

Over a 4 year grant? This is just a guess, I don't have the IRS database at my hands. Maybe $200-300k after-tax sounds more reasonable? Like I said above -- "with some luck"

You have not yet actually made a guess you've just kept asserting that "a lot of money" is "a lot of money" and I agree. A lot of money is a lot money. I just think that modulo nobody is actually seeing a lot of money from start-up employee equity.

The problem is that it's not an easy thing to estimate. I know I've had equity grants that I thought were worth $x but turned out to be worth $x * 4. But you don't sell all of it at once, and you don't pay all of the tax bill when you sell, so it's a very hard thing to know. $200-300k after taxes is, I'm sure, not a rare outcome over a 4-year vest.

I'd love to see real data on what percentage of tech workers who receive equity ACTUALLY end up cashing out for over, say, $100K. Not a HN Survey, because of course everyone here has $10MM in equity, a mansion on the Peninsula, and a supermodel spouse. But a real survey across the huge tech company landscape, in and out of Silicon Valley.

Wealthfront article mentioned (i think) https://blog.wealthfront.com/college-vs-retirement-savings-s...

Not exactly true since select bigcos pay quite well these days.

if you live in the bay area and have a normal nuclear family, you need equity if you hope to pay for a house, college, etc.

Then holy hell am I glad I don't live in the Bay area. Because, as the article demonstrates, there is zero guarantee that the equity you have will be worth anything. That you'd depend on such a thing to pay your mortgage and send your kids to college? Madness.

It's not like you sign a contract that says you must remain here for 20 years. Read the Wealthfront article linked in a sibling comment.

It's all about risk. Unfortunately, this risk did not pay off.

If you want risk, be an entrepreneur. If you want security, be an employee for a big company.

And I suppose I should add, "If you want to get screwed over, be an employee at a unicorn startup," based on this new information.

I'm not as pessimistic as most here, but start-up employee really is the worst of all worlds.

1. Reports vary but the general consensus seems to be lower pay than a Fortune 500 or similar for more demanding hours.

2. If you're offered equity it's an insulting fractional percentage (how can you be offered 0.1% and not let the profanities fly?), and will need to use actual money to exercise the options.

3. There are tons of stories of completely incompetent and/or corrupt founders literally locking the door on employees (Zirtual et al).

4. I'd be remiss if I didn't at least bring up the insane (comparatively) COL of the Bay Area compared to even other large US metropolitan areas.

I'm not going to start railing about VC-istan because I do think the degree to which the system is rigged gets overblown, but if you're going to be involved in start-ups it doesn't make sense to be anything other than a founder, C-level-for-hire employee, or investor IMO.

I always find it funny when startup founders believe that they are taking on more "risk".

So when the company isn't doing well, the founder lays themselves off first right? No? Hm, seems like the rank and file employee takes on the risk there...

Not to mention that it's probably a lot easier for a founder to get another job than their employees. Oh and by the way, the founder has been paid more, has gotten more stock and has probably had investors pay for a lot more nice dinners/drinks than their employees.

But yeah, the founders deserve to be compensated much higher because of this "risk", yes indeed.

As someone whose best friend started a business that is being grown organically (no seed money, no investors, no venture capitalist, just an idea), my perspective is probably different than most of HN's.

The risk he endured was literally starving. If it wasn't for us, he very well might have.

Considering I work for the biggest hospital chain in the world, I just had to seek new employment because they closed our 'division' down without notice. Security is an illusion, or temporary at best.

Risk is real. And it resides in all places of employment. You have to hedge your bets.

There are several options one must weigh when they are deciding on job offers.

Where you work is so important and yet so many people seem to put such little effort into negotiation, risk assessment, runway, overall comp, etc. etc.

If you're taking equity in place of a market rate salary you better to be absolutely 100% sure you know you're taking a massive risk and forfeiting real dollars for hypothetical dollars that 9.999/10 will never exist.

Note: A great read about equity http://blog.alexmaccaw.com/an-engineers-guide-to-stock-optio...

While that does suck... they exercised early for the capital gains tax treatment. If there was no risk involved, it doesn't really deserve a lower tax rate.

in most standard startup contracts you are forced to either exercise when leaving the startup (30-90days) or forfeit them

Which is to say nothing of the fact that it's still an investment in a company, and carries with it risk, including a full loss.

Anyone implying that owning equity in a company has any guaranteed payout, even on acquisition, is being intentionally misleading, I think.

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